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Currency Outlook

Rupee Outlook

* Rupee depreciated on Thursday amid weak Asian peers and strong dollar demand from the importers, while likely central bank intervention capped its losses. The rupee fell 1.5% in the financial year ending March 31st and logged its third consecutive quarterly fall.

* USDINR is expected to move towards higher end of the consolidation range 83.30-83.55 amid strong dollar. Improved US manufacturing PMI data would support the dollar to trade higher. Further, higher crude oil prices and weak Asian peer would weigh on the rupee. Meanwhile, higher forex reserves and improved risk sentiments would limit the depreciation in rupee beyond 83.55. So we expect rupee to move in a very tight range of 83.30-83.55. Only a move below 83.30 it would slide towards 83.20.

Euro and Pound Outlook

* Euro traded lower on Monday and hit its lowest level in a month amid strong dollar. Trading volume was low since the markets in the Eurozone were closed for the Easter Monday holiday. EURUSD is expected to decline towards 1.07 on expectation of contraction in the manufacturing activity in the region. Meanwhile, forecast of rise in German CPI numbers could limit its downside. EURINR April is likely to move towards 89.50, as long as it trades under 90.00. Below 89.50 it could test 89.20.

* Pound hits 6-week low on Monday amid strong dollar. Less-hawkish BOE rate expectation continued to weigh on the pair. The pair is expected to weaken further towards 1.2500 on forecast of contraction in the manufacturing activity. GBPINR April is likely move towards 104.50 as long as it trades under 105.20. Only a move below 104.50 it would slip towards 104.20 level.

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